What are we talking about? The issue of paying wages in an envelope remains relevant for many companies and employees. Gray wages are the part of wages that are paid unofficially, without taking into account taxes and contributions.
What are the risks? Why do employers take such a step, and what risks does it pose for all participants in the process? In this article, we will consider the responsibility of managers, risks for employees, and possible fines.
The article explains:
What is a grey salary and why is it paid?
Risks of workers agreeing to grey wages
What workers can do to protect themselves
Manager's responsibility when paying gray wages
Fines for employees and managers
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What is a grey salary and why is it paid?
Gray salary is the payment of part of the salary in cash, without official registration and payment of taxes. If the labor relations between the employee and the employer are not formalized in any way, the salary in an envelope is paid not partially, but in full.
Salary in an envelope
Source: shutterstock.com
From this official salary, the manager pays contributions and personal income tax. The rest, which is paid in an envelope, bypasses salary deductions. Thus, the employer saves at the expense of the employee.
The main reasons why employers resort to grey wages:
reducing the tax burden.
reduction of costs for social contributions.
increasing competitiveness by reducing costs.
Important: such actions carry serious risks, and both employers and employees themselves may be held liable.
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Risks of workers agreeing to grey wages
The employee receives a grey salary solely at his own risk. Neither the amount, nor the procedure, nor the term of its payment are fixed by law or the employment contract.
At any moment, the employer can stop paying wages, and it will be difficult to get money in this situation. And it is better for the employee to understand this before agreeing to receive wages in this way.